Let's backtrack to the beginning. Please consider Prichard files for bankruptcy protection again.
Wednesday, October 28, 2009Pensioners Have Received No Checks For Six Months
The city of Prichard filed for bankruptcy Tuesday in an attempt to cope with the debt created by fighting lawsuits and addressing the demands of unpaid and agitated retired city employees.
The Chapter 9 filing marks the second time in a decade that the city declared it was out of money. Mayor Ron Davis, who just two years ago helped the city pay off its creditors from the 1999 bankruptcy, blamed the latest financial crisis in part on a flawed municipal pension plan. The filing came a day before Davis and the city Finance Director Rex Williams were slated to be deposed by attorneys representing the pensioners in a lawsuit filed in August.
With the filing, that testimony will be put on hold, along with any other litigation pending against the city.
"After careful review of all of our options, bankruptcy protection seems to be the only solution left at this time," Davis said in a statement released Tuesday afternoon. "Over the past 50 years, the pension plan was amended by the Legislature more than fifteen times, and always the economic burden on the City was increased. This has been a long-term problem that was unfortunately inherited by this administration.
"After several lawsuits filed by pensioners, it has forced us to come to this decision, one that will protect the city and its residents," Davis' statement added.
Please consider Still no money for Prichard pensioners
A bankruptcy court judge has given the City of Prichard two more months to figure out how they will pay retired city workers. Prichard pensioners have gone six months without a pension check.Prichard Demographics
Prichard is operating under the protection of Title IX Bankruptcy, and for many people, that means no promised pension payments.
After six months with no pay, Prichard pensioners put their faith into the courts. They hoped a judge would force the city to pay some, if not all, of the pension money it owes.
Rule Number One
You can't pay what you do not have. The problem for Prichard is a declining tax base, loss of population, declining property values, and most importantly a pension plan that was amended by the Alabama legislature more than fifteen times, over the years.
Each modification increased the economic burden on the city, every Alabama city in fact.
Every state in the union needs to stop meddling in the affairs of cities. Cities in Illinois are in the same boat.
Prichard never would have made those promises except they were forced by the state. The question is what to do about it. Expect to see more sad cases like these end up in bankruptcy court. Promises were made that cannot be met. The state forced those promises on cities.
Higher taxes are not the answer. At this point, there is no answer that will satisfy anyone, let alone everyone.
If the court declares the city must pay up in full, perhaps the city should pursue dissolution. What I expect to happen is for the bankruptcy court and the city to agree to pay pensioners some minimum benefit, far less than what was promised.
It's only a matter of time before a major city decides to do what Prichard Alabama and Vallejo California did: declare bankruptcy to shed illegitimate pension promises crammed down city throats by socialist state legislatures.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List
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